US Government Import Tariff Receipts now Exceed 5.3% of Net Revenues.

Based upon June tariff remittance, the US government revenues were bolstered by $27.2 billion in tariffs.

https://fiscaldata.treasury.gov/datasets/monthly-treasury-statement/summary-of-receipts-outlays-and-the-deficit-surplus-of-the-u-s-government

The revenue run rate is now on pace to exceed $300 billion annually, tracking well above an earlier forecast of US Treasury secretary Scott Bessent.

As almost all of the tariff payments made to the United States were offset by currency change thus far in 2025, it would appear that corporations, not consumers, are absorbing the incremental tariff expense.

By way of example, the EURO has appreciated from $1.0352 at the start of 2025, to $1.169 today. The Mexican peso is up 9% vs the USD in 2025. After factoring in the currency appreciation of the export currencies, the corporations who sell into the United States are earning more off of the currency move, adjusted into local accounts, than they are losing on the tariff expense expressed in USD. While exporters will receive less in their local currency when they sell at current USD values, most multinational firms employ hedge books staggered over multiple quarters, often extending further than two years in duration and have protected their top lines to some extent against a USD decline.

In any event, what may have been a 10% blanket tariff in USD at the start of the year, for a European exporter of goods into the US, is now an effective tariff of just 8.7% on that same sale today, expressed as a percentage of a current Euro value.

An absolute lack of impact upon global accounts may go a very long way towards explaining a US government hesitation to lock in tariff import charges at the present levels.

Almost every investment pundit on the planet failed to consider the possibility of currency mitigation on local accounts. And, with a considerable decline in the value of the USD against a global currency basket, there is no reason that the Trump administration cannot further increase the tariff rates rather sharply, or, better yet, actually levy the charges (rather than announce a rate only to defer implementation).

The tariff revenue generated in just the first half of 2025 is far too significant to end or be reduced.

Politically and economically, in light of the USD depreciation against the global currency basket, the percentage of US government receipts now funded by tariffs have plenty of leg room to be raised. So, expect it to stick and likely expand/increase to a encompass a greater number of goods and categories. In fact, given the “gaming” risks for the United States treasury, whereby businesses will employ workarounds, a simple blanket announcement of a 15%-20%, no exemption, rate makes far more sense than individual nation deals that promote circumvention and export arbitrage.

An annualized run rate of $1 trillion would represent a revenue victory for the American government and in an economy featuring multitrillion dollar valuations for individual equities, a $1 trillion tax figure readily rolls off the tongue. In order to make that number, $1 trillion in annual tariffs, a reality, the US import tariff schedule will need to be expanded, with average baseline import charges set closer to a 20% level and virtually no exemptions on offer.

$1 trillion in tariff revenue also fully funds US Medicare/VA annual subsidy expenditures by the US government. THAT would make for an impressive sound-bite in a stump speech:

“100% of your health care costs are now being funded by tariffs“.

Such a statement, were it to sink in, would then result in an end to American resistance of tariffs; the public would equate any reduction of import levies to a cut in health care. Rest assured, marketers within the White House are likely drawing up the analogy and testing out phrasing in focus groups.

For all the wringing of hands, wailing and rending of garments by anti-tariff doomsayers, the $300 billion plus annualized take rate has been largely consequence free for the US economy.

Currency offsets and absorption of the tariff expense at the corporate level goes a very long way towards explaining why most countries are vocalizing their displeasure with current American government policy, whipping up an Anti-American fervor among their populace, yet not levying counter tariffs in response. Because, thus far, import tariff charges have been benign and corporations are eating much of the import tax themselves, offset by their currency hedge book.

Now, the US administration can work on the next phase, framing the narrative for further hikes. Provided that the republican administration can place tariffs in the form of a binary choice:

“if you cut tariffs, you will cut into Medicare“,

Tte public will quickly come on-side. Yes, protests will continue, just not in the form that anti-tariff proponents will like. New placards will be printed all throughout the United States declaring, in large print, “increase tariffs, save our Medicare” and ultimately, with enough massaging of the story:

“raise tariffs to protect Social Security“.

The US government needs exactly $1 trillion in annualized tariff revenues for that messaging to be effective, too great a sum to end or American social safety nets will be placed in harms way.

The first annualized $300 billion of import levy was economically easy, nothing more than a political hot potato. The second $300 billion will come from the end of carve-outs and actual implementation of declared, but not yet implemented, import taxes. An easy $100 billion increment might be had by changing out most of the provisions of the USMCA (US-Mexico-Canada Agreement on free trade) that comes up for renegotiation on July 1st 2026.

Only the final $300 billion of tariff might offer a modicum of economic risk. But by that time, the public, with persuasion (and the distribution of relatively risk free money is highly persuasive), will be demanding, insisting, on increased import tariffs, not less.

In a reversal of the USD decline against a global currency basket, future import tariff charges will then hurt exporting nations and export oriented companies that sell to the USA.

But, with a few exceptions, not before a currency reversal. And by then, the narrative may have changed in the minds of the American populace and there won’t be any going back. Once Americans equate import tariffs with enhanced entitlement and program spending; once the US government puts up new, shiny power plants boldly emblazoned with signage “paid for by import tariffs“, the public will be pushing politicians, on both sides of the aisle, for more import levies.

https://fortune.com/2025/07/13/who-pays-tariffs-inflation-trump/